Microsoft, HP, Intel and AMD continue to drown as PC industry in tumult

The personal-computer industry continued down a tumultuous path Tuesday, as Microsoft dealt with the fallout from axing its software chief soon after the launch of its newest operating system, Hewlett-Packard continued to hit new stock lows and chipmaker Advanced Micro Devices hired a bank to pursue possible drastic moves.

Analysts and investors reeled from the change so soon after the release of Windows 8, which those within the PC industry hoped would help boost companies that have been struggling as mobile devices have challenged the traditional leader in the computing arena. Reports said that Sinofsky's aggressive style and challenge to CEO Steve Ballmer led to his exit, but analysts said that the loss outweighed any possible gains in office harmony.

"Sinofsky may have ruled the kingdom with an iron fist, but he performed amazingly well in rescuing Windows following Vista," Wells Fargo analysts said in a note. "While we think Windows 8 and Surface have promise, there is still a ton of work ahead to catch iOS and Android."

"One of the main things you lose by not having Steven Sinofsky there is having a person who has 20-plus years experience in and around the company as a leader and as somebody who has shipped products reliably," Directions on Microsoft analyst Wes Miller told Bloomberg News. "Windows 8 and Windows RT and Surface have not yet proven themselves in the market so it's just unusual and a little disconcerting."

"The consumer market remains weak and the tablet and smartphone markets continue to cannibalize the PC market; the iPad Mini, new iPad and the iPhone 5 could continue to take wallet share," Reitzes wrote, later adding "After years of denial, most PC industry players still don't seem to realize what is happening — and don't have contingency plans."

Hewlett-Packard, the top PC manufacturer in the United States, is the biggest victim, as its other main hardware market -- printers -- has also deflated as consumers access documents on mobile devices or save them on flash drives instead of printing them.

"PC's are not the only subsector impacted in tech -- as printing also is caught in the wake of mobility. Given these factors we are significantly cutting estimates for the PC industry to reflect further deterioration in PC related revenues," Reitzes wrote.

HP has been trading at decade-low prices the past few days, and once again sank to a new decade-low of $13.07 Tuesday. Sinking right along with it was Santa Clara chipmaker Intel: The market leader in processors declined to a new 52-week low of $20.18 in Tuesday's session.

Cisco beats expectations with earnings, a 'pleasant surprise' for tech

While tech was a drag on Wall Street in Tuesday trading, with the tech-heavy Nasdaq falling the most among the three major U.S. stock indexes and the SV150 dropping 0.6 percent, Cisco's earnings report could help the sector bounce back Wednesday. The San Jose networking giant, which is seen as a bellwether for the entire industry, beat analyst expectations for revenues and earnings with its quarterly report after markets closed Tuesday.

In its fiscal first quarter, Cisco brought in $11.9 billion in revenues for earnings per share of 48 cents, excluding certain items; analysts expected the company to earn 46 cents a share on revenues of $11.77 billion, according to Thomson Reuters research.

Analysts said the company's focus on a greater range of products, cutting prices and trimming expenses led to a strong quarter for the company.

Analysts believe Cisco is a canary in the coal mine for the tech sector because if companies spend money on new networking equipment, they are likely to keep spending on new hardware and software, so the report helped boost hopes for other enterprise sales.

"Given concerns about the fiscal cliff and potential spending woes from enterprise, this was a bit of a pleasant surprise," Edward Jones analyst Bill Kreher told Bloomberg News.

Zynga shakes up top executives after CFO departs for Facebook

Upheaval continued at San Francisco social-gaming company Zynga on Tuesday, as Chief Financial Officer David Wehner left for the company's biggest partner, Facebook, amid a reshuffling of top executives.

Zynga named David Ko as its new chief operating officer, replacing John Schappert, who left in August. Ko had been in charge of mobile games, and his promotion could show that Zynga is focusing on mobile as it attempts to come back from a weak year that has ravaged its stock price.

Zynga's other new executives are also the result of in-hours promotions -- Mark Vranesh replaces Wehner as CFO, Steven Chiang becomes president of games, and Barry Cottle becomes chief revenue officer.

"These changes come at an important time. We are positioning ourselves for long-term growth and I'm confident that we have the breadth and depth of management talent to deliver on our mission," CEO Mark Pincus wrote in a letter to employees.

Wehner was hired as a vice president of corporate finance and business planning at Facebook. "Dave's deep expertise in finance, strategy and corporate development will be a great addition to our team," the Menlo Park social network said in a statement.

And the widely watched Standard & Poor's 500 index: Down 5.5, or 0.4 percent, to 1,374.53

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.